Faber noted that Pershing Square is significantly underwater on the position due to Target's weak stock performance.

In the letter, Ackman said they believe the stock is significantly undervalued. Ackmam supports the company's decision to postpone the sale of the receivables unit due to the weak credit markets. Ackman said the stock could go to $120 in three years if the company completes the stock buyback, sells the credit card unit and explores a potential real estate transaction.